American Promotional Events, Inc.-Northwest v. City and County of Honolulu et al

Filing
25

ORDER DENYING PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION 4 . Signed by JUDGE LESLIE E. KOBAYASHI on 6/17/2011. [Order follows hearing held 6/13/2011 on Motion for Preliminary Injunction, doc no. 4 . Minutes: docket entry no. 22 ] (afc) CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications will be served by first class mail on June 20, 2011.

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
AMERICAN PROMOTIONAL EVENTS,
INC. - NORTHWEST dba TNT
FIREWORKS,
)
)
)
)
Plaintiff,
)
)
)
vs.
)
CITY AND COUNTY OF HONOLULU, )
a municipal corporation, ET
)
)
AL.,
)
)
Defendants.
_____________________________ )
CIVIL NO. 11-00242 LEK-RLP
ORDER DENYING PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION
Before the Court is Plaintiff American Promotional
Events, Inc. – Northwest, doing business as TNT Fireworks’,
(“Plaintiff” or “TNT”) Motion for Preliminary Injunction
(“Motion”), filed on April 11, 2011.
Defendant City and County
of Honolulu (“Defendant” or “City”) filed its memorandum in
opposition on May 23, 2011, Plaintiff filed its supplemental
memorandum in support on May 31, 2011, and Defendant filed its
supplemental memorandum in opposition on June 6, 2011.
matter came on for hearing on June 13, 2011.
This
Appearing on behalf
of Plaintiff were Thomas Berger, Esq., and Robert Chapman, Esq.,
and appearing on behalf of Defendant were Duane Pang, Esq.,
Elisabeth Contrades, Esq., and Kamilla Chan, Esq.
After careful
consideration of the Motion, supporting and opposing memoranda,
and the arguments of counsel, Plaintiff’s Motion is HEREBY DENIED
because, in order for the Court to issue a preliminary
injunction, Plaintiff must establish that it is likely to succeed
on the merits, that it is likely to suffer irreparable harm in
the absence of preliminary relief, that the balance of equities
tips in its favor, and that an injunction is in the public
interest, and this Court cannot conclude that Plaintiff has met
its burden of proof for the reasons set forth below.
BACKGROUND
Plaintiff seeks a preliminary injunction that enjoins
Defendant:
from enforcing against Plaintiff the provisions,
penalties or forfeiture powers set forth by the
Hawaii Revised Statutes in Chapter 132D
(“Fireworks Control Law”) and Hawaii Revised
Ordinances, Chapter 20, article _, titled
“Regulation of Fireworks”, see CCH Ordinance 10-25
(January 2, 2011), until a final hearing and
determination of the merits in the above-entitled
action.
[Motion at 7.]
Effective January 2, 2011, the Honolulu City Council
amended the City Fire Code, adding a new Section 6 (“Fireworks
Ordinance”), entitled “Regulation of Fireworks.”
It states, in
pertinent part:
Sec. 20-6.2 Prohibitions; Permitted uses.
Except as otherwise provided in this article:
(a) It shall be unlawful for any person to
possess, use, explode or cause to explode any
consumer fireworks[1] within the city.
1
The Fireworks Ordinance defines “consumer fireworks” as
(continued...)
2
(b) It shall be unlawful for any person to
possess, use, explode or cause to explode any
aerial device, articles pyrotechnic or
display fireworks within the city.
(c) It shall be unlawful for any person to
import, store, sell, keep or offer for sale,
expose for sale any fireworks within the
city.
Sec. 20-6.3 Exceptions.
The prohibitions in Section 20-6.2 shall not apply
to:
(a) The import, storage, sale and use by a
person having obtained a license or permit
for display fireworks pursuant to Sections
20-6.4 and 20-6.12;
(b) The import, storage, sale and use by a
person having obtained a license or permit
for firecrackers pursuant to Sections 20-6.4
and 20-6.13;
1
(...continued)
follows:
“Consumer fireworks” means any fireworks designed
primarily for retail sale to the public during
authorized dates and times, and produces visible
or audible effects by combustion, and that is
designed to remain on or near the ground and,
while stationary or spinning rapidly on or near
the ground, emits smoke, a shower of colored
sparks, whistling effects, flitter sparks, or
balls of colored sparks, and includes combination
items that contain one or more of these effects.
“Consumer fireworks” include firecrackers, snakes,
sparklers, fountains, and cylindrical or cone
fountains that emit effects up to a height not
greater than 12 feet above the ground,
illuminating torches, bamboo cannons, whistles,
toy smoke devices, wheels, and ground spinners
that when ignited remain within a circle with a
radius of 12 feet as measured from the point where
the item was placed and ignited, novelty or trick
items, combination items, paperless firecrackers,
and other fireworks of like construction that are
designed to produce the same or similar effects.
Revised Ordinances of Honolulu (“ROH”) § 20-6.1.
3
(c) The use of flares, noisemakers, or
signals for warning, pest control, or
illumination purposes by the police and fire
departments, utility companies,
transportation agencies, and other
governmental or private agencies or persons,
including agricultural operations, in
connection with emergencies, their duties, or
business; or
(d) The sale or use of blank cartridges for a
show or theater, or for signal, commercial,
or institutional purposes in athletics or
sports.
. . . .
Sec. 20-6.9 Penalty.
(a) Any person violating Section 20-6.2(a)
shall be sentenced to a fine of not less than
$200 and not more than $1,000 or by
imprisonment of not more than 30 days or by
both such fine and imprisonment.
(b) Any person violating any provision of
this article, other than Section 20-6.2(a)
shall be sentenced to a fine of not less than
$250 and not more than $2,000 or by
imprisonment of not more than one year or by
both such fine and imprisonment.
(c) In addition to the penalties provided in
subsections (a) and (b), if the person is
licensed to sell fireworks, the court may, in
addition to the foregoing penalties, revoke
or suspend such license. No license shall be
issued to any person whose license has been
so revoked or suspended until the expiration
of two years after such revocation or
suspension.
Revised Ordinances of Honolulu (“ROH”) §§ 20-6.2, -6.3, -6.9.
I.
Plaintiff’s Complaint
The Complaint alleges jurisdiction pursuant to 28
U.S.C. §§ 2201-2202, the Declaratory Judgment Act, and alleges
violations of 42 U.S.C. § 1983, Article I, Section 8, clause 3 of
the Constitution of the United States of America (“Commerce
4
Clause”), and Articles VIII (“Local Government”) and I, Section 5
(“Due Process”) of the Constitution of the State of Hawai‘i.
[Complaint at ¶ 1.]
The Complaint alleges that the City’s
restrictions on the sale of consumer fireworks expose Plaintiff
to fines, criminal liability and other penalties.
A.
Plaintiff’s Distribution Operations
Plaintiff is engaged in the business of importing and
wholesaling “consumer fireworks and fire crackers,” and does not
import or wholesale “display fireworks.”
It runs its import and
distribution operations from a warehouse located in Honolulu.
[Id. at ¶ 22.]
Plaintiff claims that it has invested over
$750,000 to improve the warehouse in compliance with State and
County fire and building codes.
[Id. at ¶ 23.]
The warehouse is
Plaintiff’s central distribution facility; consumer fireworks are
delivered to the warehouse, where they are unpackaged and stored.
[Id. at ¶ 24.]
Plaintiff also has a firecracker inventory at the
warehouse for sales statewide.
[Id. at ¶ 31.]
Plaintiff orders consumer fireworks in bulk from
international manufacturers throughout the year, and claims that
it is “impossible for TNT Fireworks to directly ship these orders
from international manufacturers to the County of Hawaii, the
County of Maui, and County of Kauai (“Neighbor Islands”) without
traveling through the port of Honolulu[.]”
[Id. at ¶ 25.]
The
Complaint alleges that Plaintiff is the distributor for over one-
5
hundred retail clients on the Neighbor Islands, where consumer
fireworks are legal, with some restrictions.
According to the
Complaint, Neighbor Island retailers will not accept delivery of
fireworks from Plaintiff until a few days before fireworks
selling season, therefore, a centralized warehouse in Honolulu is
necessary for distribution.
[Id. at ¶¶ 26-28.]
The Complaint
alleges that: “The cost or burden for TNT Fireworks to open a
distribution warehouse for consumer fireworks on the Neighbor
Islands is prohibitively expensive, and/or impossible given the
‘hub and spoke’ model of the Hawaii economy, and/or the
requirements of the county and state fire codes.”
B.
[Id. at ¶ 32.]
License Application Process
Plaintiff alleges that, on or before March 31, 2010,
the Honolulu Fire Department (“HFD”) granted it licences “to
import, wholesale, and store fireworks product intended for sale
in the State of Hawaii” at its warehouse.
According to the
Complaint, on November 10, 2010, HFD notified Plaintiff that
valid licences for import, wholesale, or storage of consumer
fireworks would be honored through March 11, 2011.
[Id. at
¶¶ 33-34.]
On March 15, 2011, Plaintiff applied to HFD for two
permits for “Proposed Cultural Use of Consumer Fireworks,” and
the permits were approved that same day.
On March 16, 2011,
Plaintiff applied for three licences to import, wholesale, and
6
store consumer fireworks in the State (“License Applications”),
listing the storage facility as its Honolulu warehouse.
¶¶ 35-36.]
[Id. at
Plaintiff received a response from HFD on April 5,
2011, stating that:
“Ordinance 10-25 does not permit the importation,
storage, and/or sale of any fireworks other than
display fireworks or firecrackers as defined
therein.” Further, “Honolulu Fire Department’s
records indicate that American Promotional Events
NW, Inc.’s (dba TNT Fireworks) license to store
fireworks expire on March 31, 2011.”
[Id. at ¶ 37.]
C.
Plaintiff’s Causes of Action
The Complaint alleges three claims for relief: (1)
violation of 42 U.S.C. § 1983 and the Commerce Clause; (2)
invalid attempt by the City to regulate matters of statewide
concern, in violation of Article VIII of the Hawai‘i
Constitution; and (3) vague and overbroad restrictions that
violate due process of law under the Hawai‘i Constitution.
II.
Plaintiff’s Motion
Plaintiff’s Motion repeats the allegations in the
Complaint and seeks a preliminary injunction preventing the City
from enforcing the Fireworks Ordinance.
Plaintiff explains that
Honolulu is the “hub” for the Hawaiian shipping industry.
[Mem.
in Supp. of Motion, Decl. of Jerald Farley (“Farley Decl.), at
¶ 5; Exh. 1 (12/13/10 Shipping Industry Presentation).]
Goods
arriving into Hawai‘i travel to the Honolulu “hub,” before
7
continuing on to the Neighbor Islands, or “spokes.”
[Id.]
According to Plaintiff, the “consumer fireworks
business model is unique.
[TNT] spends eleven (11) months of the
year preparing for a selling season of two (2) to three (3)
weeks.
Retail orders are placed with [TNT] throughout the year.
Likewise, orders are placed with the manufacturers for shipment
throughout the year.”
[Farley Decl. at ¶ 14.]
With respect to
the distribution and shipment of fireworks, Plaintiff asserts
that:
15. When consumer fireworks product arrives
in Honolulu it needs to be unpacked and then
organized before it can be sent to the neighbor
island retailers.
16. At the end of the selling season, [TNT]
takes unsold merchandise back from its customers.
For [TNT] customers on the neighbor islands, the
unsold merchandise is consolidated into containers
and shipped back to the Warehouse in Honolulu.
Upon arriving at the Warehouse, the containers are
unloaded and the returned merchandise is sorted
and counted. [TNT] staff then spends months
consolidating merchandise that has been returned
and repackages all similar merchandise into US DOT
approved cartons. The product is organized in the
Warehouse in anticipation of the next selling
season.
. . . .
18. It takes from the end of the Fourth of
July selling season until September or early
October to complete the sorting, counting,
billing, repackaging and Warehouse rearranging
process. From the end of the New Year’s Eve
selling season it takes [TNT] permanent and
temporary staff until mid-April and sometimes
early May to complete this process.
[Id. at ¶¶ 15-16, 18.]
In order to operate this distribution
system, TNT spent $750,000 to improve its Honolulu warehouse.
8
[Id. at ¶ 11.]
12. The improvements included altering all
exterior walls to 50 feet or less from any other
structure, property line or imputed property line
so that they met requirements for a 4-hour rated
fire wall and significant upgrades to the roof,
electrical, mechanical, air conditioning, fire
alarm and security systems as well as other
significant improvements.
13. After the enactment of the Honolulu
Fireworks Ordinance, I traveled to the Island of
Hawaii on multiple occasions in an effort to find
a building that would meet all applicable code
requirements or could be modified to meet all
applicable code requirements. No such building
was available for rent. Further, no such building
may exist in the State of Hawaii other than Oahu.
[Id. ¶¶ 12-13.]
According to Plaintiff, the value of its current
retail consumer fireworks inventory stored at the Honolulu
Warehouse exceeds $800,000.
[Id. at ¶ 20.]
Plaintiff argues
that the cost of opening a distribution warehouse on the Neighbor
Islands is prohibitively expensive and not practical given the
“hub and spoke” shipping economy.
[Mem. in Supp. of Motion at
7.]
On March 16, 2011, Plaintiff applied to the HFD for
three licenses to import, wholesale, and store fireworks, listing
the Honolulu warehouse as the storage facility and including
checks to the City totaling $6,000.
[Id. at 9.]
According to
Plaintiff, “Chuck Perry of the Honolulu Fire Department told
[a TNT employee] that no licenses of any kind would be processed
until the Department had determined that only firecrackers
remained in the warehouse.”
[Farley Decl. at ¶ 8.]
9
By letter
dated April 1, 2011, HFD informed Plaintiff that “Ordinance 10-25
does not permit the importation, storage, and/or sale of any
fireworks other than display fireworks or firecrackers as defined
therein.”
[Farley Decl., Exh. 7 (4/1/11 Letter from Fire Chief
K. Silva).]
On April 5, 2011, the City and HFD informed
Plaintiff that “they could provide ‘no guarantee’ that the
provisions, penalty, and forfeiture powers set forth by the
Fireworks Control Law or the Honolulu Fireworks Ordinance would
not be applied to TNT during the pendency of the License
Application process[.]”
[Motion, Decl. of Thomas Berger (“Berger
Decl.”), at ¶ 7.]
Plaintiff argues that the: (1) Honolulu Fireworks
Ordinance, Revised Ordinances of Honolulu (“ROH”) 10-25, § 20-6;
(2) City’s “Official Policy” that the import and storage of
consumer fireworks in Honolulu violates the Fireworks Ordinance;
and (3) City’s “Decision” to not grant TNT’s License Applications
because the License Applications do not comply with the Fireworks
Ordinance and Official policy, each violate its rights under the
federal and state Constitutions.
A.
The Commerce Clause
Plaintiff argues that the City’s Fireworks Ordinance,
Official Policy, and Decision violate the Commerce Clause of the
United States Constitution because they directly regulate and
discriminate against commerce.
[Mem. in Supp. of Motion at 13.]
10
According to Plaintiff, the “practical effect” of the City’s
conduct is that “TNT cannot lawfully transport fireworks from
outside the State of Hawaii to the Neighbor Islands.”
13-14.]
[Id. at
Plaintiff claims that, the HFD’s decision not to approve
the License Applications based on the Fireworks Ordinance and
Official Policy “has the practical effect of quashing interstate
commerce in lawful fireworks product between the U.S. Mainland,
international manufacturers, and the Neighbor Islands.”
[Id. at
14.]
Plaintiff claims that there is “no conceivable fact
pattern under which a fireworks importer and wholesaler in the
State of Hawaii can operate a statewide business without
violating,” the City’s rules.
[Id.]
Further, it argues that it
is “impossible for TNT to transport firework product to the
neighbor islands efficiently or economically by plane or by
truck.
The transportation of firework product in bulk by plane
is dangerous, costly, and is strictly regulated by the federal
government.”
[Id. at 14-15.]
Locating a distribution warehouse on the Neighbor
Islands is “economically unfeasible,” and would nonetheless
violate the Fireworks Ordinance, according to Plaintiff.
For
example, if TNT had a warehouse in Kauai or Maui county, the
fireworks would still be imported from China to the State of
Hawai‘i via Honolulu, and once in Honolulu, TNT would be in
11
violation of the City’s laws prohibiting the import and storage
of consumer fireworks in Honolulu.
[Id. at 15-16.]
“Import” is
defined in the Fireworks Ordinance to mean “to transport or
attempt to transport fireworks into the city or to cause
fireworks to be transported into the city,” and therefore, the
moment fireworks are “unloaded off a ship in Honolulu harbor the
dockworker handing and transporting the product is in violation
of the [City’s] Official Fireworks Policies.
Likewise, the party
that ordered the product is in violation of the [City’s] Official
Fireworks Policies regardless of the intended destination of the
product.”
[Id. at 16.]
Under the balancing test set forth in Pike v. Bruce
Church, Inc., 397 U.S. 137, 142 (1970), Plaintiff argues that
“nondiscriminatory regulations that have only incidental effects
on interstate commerce are valid unless ‘the burden imposed on
such commerce is clearly excessive in relation to the putative
local benefits.’”
[Id. at 17 (quoting Oregon Waste Systems, Inc.
v. Dep’t of Envtl. Quality, 511 U.S. 93, 99 (1994)).]
Plaintiff
discusses the weight and nature of the local regulatory concern
in light of the burden on interstate commerce, and argues that
the City’s policies substantially affect and burden its
interstate business operations.
Plaintiff asserts that the
City’s legitimate public safety concerns do not justify the
Fireworks Ordinance, and creates public safety anomalies.
12
For
example, if retailers from Neighbor Islands are prohibited from
returning unsold consumer fireworks to a Honolulu warehouse, then
there is an increased chance the unsold products will enter the
Neighbor Islands black-market from unauthorized leakage by
employees.
Plaintiff argues the Fireworks Ordinance effectively
destroys the process by which Plaintiff consolidates unused
fireworks for the next selling season, by making it illegal for
the retailers to send the unsold merchandise back to Honolulu.
[Id. at 17-18.]
B.
Article VIII of the Hawai‘i Constitution
Plaintiff next argues that the City’s fireworks laws
violate the Constitution of the State of Hawai‘i, Article VIII,
§§ 1, 6, which set forth the powers of political subdivisions
within the State.
Article VIII, section 1 states: “The
legislature shall create counties, and may create other political
subdivisions within the State, and provide for the government
thereof.
Each political subdivision shall have and exercise such
powers as shall be conferred under general laws.”
Article VIII,
section 6 states: “This article shall not limit the power of the
legislature to enact laws of statewide concern.”
Plaintiff argues that the Fireworks Ordinance exceeds
the powers conferred to the counties by general law.
Plaintiff
states that, when the Hawai‘i Legislature enacted “SB No. 1059 in
2009, which provides power to the county to enact ‘ordinances
13
that are more stringent in the control or prohibition of
fireworks than this chapter[,]” it did not contemplate providing
counties with power to regulate the import, storage, and
wholesaling of fireworks in the State.
[Id. at 20.]
Plaintiff
contends that, because the power to regulate the import, storage,
and wholesaling was not expressly provided to the counties, that
the City’s exercise of this power is not valid.
[Id.]
Plaintiff describes the City’s duty to administer
Chapter 132D, Haw. Rev. Stat., as “ministerial” to the extent it
issues import, storage, and wholesaling licenses to applicants.
Plaintiff argues that there is no valid reason for the City to
deny its License Applications submitted in March 2011.
Further,
Plaintiff argues that the Legislature did not intend for county
ordinances enacted pursuant to Haw. Rev. Stat. § 132D-17.5 to
abrogate the ministerial administrative duty imposed on the City.
[Id. at 21.]
Plaintiff also argues that, because the regulation of
commerce between the different counties is a matter of statewide
concern, the City cannot lawfully create restrictions on consumer
fireworks that interfere with the flow of commerce between the
Hawaiian Islands.
Therefore, Plaintiff claims that the Fireworks
Ordinance, which prohibits the import and storage of consumer
fireworks on Oahu, is void on its face because it effectively
regulates commerce between the islands, a matter of statewide
14
concern.
C.
[Id. at 21-22.]
Vague and Overbroad Prohibitions
Finally, Plaintiff argues that the City’s policies
amount to continuing violations of rights that are guaranteed by
Article I, § 5 of the Hawaii Constitution.
Plaintiff argues the Fireworks Ordinance is vague
because it creates a standard that is internally inconsistent and
confusing, such that a person of ordinary intelligence is left
with the impression that their conduct may be lawful when, in
fact, it is not.
For example, Plaintiff asserts that the
exceptions to the law are effectively circular, and therefore
confusing, and that a person may believe they are protected from
arrest or prosecution by securing a permit, but may still be
exposed to inconsistent or arbitrary enforcement.
It also claims
that the exceptions are ambiguous and that the HFD or Police
Department cannot enforce the Fireworks Ordinance in a manner
that is not arbitrary and discriminatory.
D.
[Id. at 24-25.]
Irreparable Harm and Balance of Equities
Plaintiff states that the viability of its statewide
business operation in fireworks importing and wholesaling is
threatened.
It claims its constitutional rights are violated and
the City’s conduct exposes Plaintiff to significant and
continuing injury, including business risk and disruption of its
operations.
Plaintiff also warns that it may be exposed to
15
misdemeanor criminal liability and other penalties because HFD
has not granted its License Applications.
Plaintiff also argues that the balance of equities tips
in its favor because of the importance of protecting its
constitutional right to engage in interstate commerce.
It also
argues that Neighbor Island retailers are expecting fireworks for
the Fourth of July to be delivered on time, and that customers
statewide expect to be able to use firecrackers during the lawful
fireworks season and for cultural purposes.
[Id. at 28-29.]
III. The City’s Memorandum in Opposition
The City filed its memorandum in opposition on May 23,
2011.
The City argues that Plaintiff is not entitled to a
preliminary injunction because: it is unlikely to succeed on the
merits of any of its three causes of action; it will not suffer
irreparable harm; the balance of equities weighs in the City’s
favor; and public interest and safety require the Court to deny
Plaintiff’s request.
The City discusses the legislative history behind the
consumer fireworks ban on Oahu.
On June 22, 2010, Act 170
amended Haw. Rev. Stat. Chapter 132D (“Fireworks Control Law”)
“by removing the prohibitions on the Counties’ authority to
regulate fireworks.”
[Mem. in Opp. at 2.]
The Act 170
legislative history includes the following language: “Your
Committee on Conference believes that counties should have
16
sufficient latitude to enact their own ordinances that are at
least as stringent as state law, including banning fireworks
entirely.
This measure clarifies existing law to that effect.”
[Id. (quoting Conf. Comm. Rep. No. 71-10, SB1059 SD2, HD3, CD1).]
Shortly after Act 170 amended the State Fireworks
Control Law, the City enacted Ordinance 10-25, which is the
subject of this lawsuit.
According to the City, the difference
between the State Fireworks Control Law and the Honolulu
Fireworks Ordinance is that all consumer fireworks are prohibited
within the City and County of Honolulu.
“Consumer fireworks are
normally identified as those fireworks that are purchased,
without a permit, at common retail outlets such as Longs, Costco,
etc. . . . [and] include fireworks that emit smoke or shower of
sparks including sparklers.”
[Id. at 5.]
With respect to Plaintiff’s License Applications, the
City states that, on April 19, 2011, HFD issued Plaintiff three
licenses to import, store, and wholesale fireworks. [Id., Decl.
of Counsel, Exhs. G-1, G-2, G-3; Aff. of Socrates Bratakos
(“Bratakos Aff.”), at ¶¶ 5, 6, 8, 9.]
The three licenses each
contain a handwritten note indicating “1.4g = firecrackers only.”
[Mem. in Supp., Decl. of Counsel, Exhs. G-1, G-2, G.]
The note
is intended to remind Plaintiff “that ROH § 20-6.2 prohibits
consumer fireworks within Honolulu County.”
¶ 6.]
17
[Bratakos Aff. at
The City claims that the licenses issued to Plaintiff
would be “recognized by the Neighbor Islands, allowing TNT
Fireworks to import all types of 1.4G class of fireworks
including consumer fireworks into the state destined for the
Neighbor Islands.”
[Mem. in Opp. at 7-8.]
Further, “HFD is
aware that some fireworks companies have import licenses issued
by other Neighbor Islands with no storage facilities in Honolulu
County.
HFD has never required a separate import license issued
by Honolulu County for these fireworks, even though the fireworks
may be transported through Honolulu County.”
¶ 9.]
[Bratakos Aff. at
Charles Perry, HFD Fireworks Inspector, states that:
15. As part of my duties and
responsibilities of implementing the Firecracker
Regulations, I have reviewed the licenses issued
by HFD, and have observed that HFD has issued
import, storage and wholesale licenses to two
other entities with the same restrictions as those
licenses issued to TNT Fireworks.
16. I am also aware that two other fireworks
companies, who previously had license to import,
wholesale and store fireworks issued by HFD are
now storing their consumer fireworks on the Big
Island.
17. I am also aware that there is at least
one company that provides service of unloading,
repackaging and reshipment fireworks and consumer
fireworks to the Neighbor Islands.
18. I have reviewed the Fire Codes for all
of the Neighbor Islands, and none of the Neighbor
Islands preclude the import or storage of consumer
fireworks on their island.
19. Under the provisions on HRS § 132D-8,
HFD has recognized import licenses that are issued
by the Neighbor Islands, and have not required
separate import licenses issued by HFD whether or
not the fireworks are shipped through Honolulu
Harbor.
18
[Mem. in Opp., Aff. of Charles Perry (“Perry Aff.”).]
A.
The Merits of Plaintiff’s Claims
1.
The Commerce Clause
The City argues that Plaintiff cannot prevail on its
Commerce Clause challenge because it has not met the “very high
burden of proof” necessary to “establish that no set of
circumstances exist under which [the Ordinance] would be valid.
The fact that [the Ordinance] might operate unconstitutionally
under some set of circumstances is insufficient to render it
wholly invalid.”
[Mem. in Opp. at 10 (citing S.D. Meyers, Inc.
v. City & County of San Francisco, 253 F.3d 461, 467 (9th Cir.
2001)).]
First, the City argues that the Fireworks Ordinance
does not discriminate against interstate commerce, but rather, is
neutral because the ban on consumer fireworks affects both instate and out-of-state interests.
[Id. at 12.]
Second, the City claims that Plaintiff reads the
Fireworks Ordinance too broadly when it claims that ROH § 206.2(c) precludes consumer fireworks from even passing through
Honolulu harbor.
The City asserts that under the import license
it issued to Plaintiff, “Plaintiff is permitted to import all
types of 1.4G class of fireworks including consumer fireworks
destined for the Neighbor Islands.”
[Id. at 14.]
Third, the City contests Plaintiff’s claim that
19
consumer fireworks must be shipped to Honolulu.
Relying on the
same Horizon Lines shipping presentation that Plaintiff cited in
its memorandum in support, the City claims that “consumer
fireworks can easily be shipped from out-of-state through
Honolulu to the Neighbor Islands.”
[Id. at 15.]
Further, the
City asserts that the Fireworks Ordinance “cannot be reasonably
read to prohibit the incidental transfer of consumer fireworks
from Horizon’s ship to a barge destined for the Neighbor
Islands.”
[Id.]
According to the City, HFD has recognized
import licenses issued by Neighbor Islands, “and has not
precluded the transportation of those fireworks through Honolulu
Harbor, nor has HFD required a separate import license be
obtained from Honolulu County.”
[Id. at 15-16.]
Next, the City cites cases from the Fifth and Tenth
Circuits holding that:
the regulation of fireworks including total bans
of fireworks within any city or state has been
determined not to be in violation of the Commerce
Clause. Cohen v. Bredehoeft, 402 F.2d 61 (5th
Cir. 1968) (upholding a total ban of fireworks
within the City of Houston); PPC Enterprises, Inc.
v. Texas City, Texas, 76 F. Supp. 2d 750 (S.D.
Tex. 1999) (upholding a city ordinance prohibiting
the sale, possession or use of fireworks within
5,000 feet of the City limits); Consigned Sales
Co., Inc. v. Sanders, 543 F. Supp. 230 (W.D. Okla.
1982) (upholding an Oklahoma state statute
prohibiting the mail-order sales of fireworks).”
[Id. at 16.]
The City argues that, although the Fireworks Ordinance
20
may require Plaintiff to alter its business operations, “such as
storing consumer fireworks in another County where the use is
legal[,]” such effects on private companies to do not violate the
Commerce Clause.
[Id. at 19.]
Further, other than
“inconvenience,” the City argues that Plaintiff submits no
evidence that unpacking and organizing consumer fireworks on
another island interferes with interstate commerce.
2.
[Id.]
Local Government Authority to Regulate Fireworks
The City next argues that the State has delegated to
the counties the full authority to ban fireworks in Haw. Rev.
Stat. § 132D-17.5, therefore, the City has not interfered with
the State’s control of regulating fireworks.
The City argues
that its ban on consumer fireworks is valid under State law.
[Id. at 21.]
3.
Vague and Overbroad
The Fireworks Ordinance is clear and unambiguous that
it “does not affect the shipping of consumer fireworks to
Neighbor Islands[,]” argues the City.
[Id. at 22.]
The City
argues that ROH § 20-6.2 “prohibits consumer fireworks in
Honolulu County.
TNT Fireworks cannot bring consumer fireworks
to its warehouse[.]”
B.
[Id.]
Irreparable Harm
Next, the City argues that Plaintiff will suffer no
irreparable harm, because HFD has granted an import license and
21
the Fireworks Ordinance does not interfere with Plaintiff
importing consumer fireworks to the Neighbor Islands.
The City
also states that Plaintiff’s expenditures associated with
improving its Honolulu warehouse were incurred before the
Fireworks Ordinance became effective.
C.
[Id. at 23-24.]
Balance of Equities and Public Interest
The City contends that the balance of equities weighs
in its favor because the burden on Plaintiff to obtain licenses
and store consumer fireworks on the Neighbor Islands is minimal
compared to the burden on HFD to monitor consumer fireworks
stored at the Honolulu warehouse for shipment to and return from
the Neighbor Islands.
That is, the City would not be able to
confirm whether the consumer fireworks were actually delivered to
Neighbor Island retailers if they were processed through the
Honolulu warehouse.
[Id. at 24-25.]
With respect to the public interest, the City cites
safety data showing that the majority of fireworks-related
injuries occur on Oahu.
The elected City Council “determined
that a total ban on consumer fireworks should be imposed.”
at 26.]
[Id.
The City argues that the public safety of its citizens
“requires that consumer fireworks be stored and wholesaled in a
County where such activities are permitted.”
IV.
[Id.]
Plaintiff’s Supplemental Memorandum in Support
At a May 16, 2011 status conference, the Court
22
permitted Plaintiff to file a supplemental memorandum regarding
relevant events occurring after the filing of the Motion.
no. 11.]
[Dkt.
Plaintiff filed its supplemental memorandum in support
on May 31, 2011.
The supplemental memorandum includes additional
information regarding Plaintiff’s operations including the
following:
12. American Promotional Events, Inc., N.W.
is the largest supplier of consumer fireworks to
the various retailers in the State of Hawaii.
Therefore a central warehouse in which its
consumer fireworks products can be accumulated
during those 46 weeks is critical and essential to
the company’s ability to pick and pack its
customers’ orders and ship them most efficiently
and within the shortest possible number of days
before the beginning of the selling season. Given
the scale, size and complexity of its business and
without a central warehouse close to the Port of
Honolulu, the company could not operate
efficiently and safely and probably would not be
able to ensure compliance with all of the
requirements imposed on it by all of the county
fire and other officials.
13. Other smaller consumer fireworks
importers or wholesalers may only have one or a
few customers. They may be able to have a single
container or a small number of containers brought
in to the State of Hawaii and with no or only
minimal handling-unloading, sorting, picking and
packing of orders-and what in the industry is
referred to as “drop ship” their orders to their
very small number of customers within the narrow
time frame imposed by Hawaii state law and
county fire and other officials. This option is
not available to American Promotional Events, Inc.
N.W.
14. When the consumer fireworks product
arrives, it is trucked to the facility to be
unloaded. The cases are hand-stacked in the
container to maximize the total available space.
At our TNT Hawaii facility the cases are unloaded
on to wooden pallets and separated based on the
23
item number and type of item shipped.
15. All TNT items coming from China are
shipped together and not separated. Items such as
non-regulated snaps and party-poppers that are
allowed on all islands are shipped in the same
container as fireworks items like fountains and
assortments. These items need to be separated for
their designated customers. At the time of
unloading, the product is checked to see if the
manifest matches actual amounts shipped. Many
times there are random samples take out by
third-party testing agencies, such as AFSL for
random sampling as well as other government
agencies in China for testing. These missing
items get recorded and the package is repacked so
that it is a complete case.
. . . .
21. There are many restrictions placed on
shipping consumer fireworks l.4G UN 0336 in
international, interstate and intrastate commerce.
Due to requirements imposed by the different fire
departments on the different islands, the amount
of time that fireworks may be in a specific retail
store varies. If they keep them longer than this
specified time, the fire department may say that
the store has to be classified as a storage
facility. Storage facilities have different
building and fire code requirements that most
stores cannot meet. So, American Promotional
Events, Inc., N.W. works with the store
management, the fire department and the shipping
company to ensure “on-time” delivery so that the
product can be placed in the store for no longer
than the time allowed. American Promotional
Events, Inc., N.W. must precisely time the
shipping of the product to the stores.
22. Product is normally allowed to be in a
store for one (1) week before the sales period.
Product must be taken out of the store one (1)
week after the sales period. This Fourth of July
season, American Promotional Events, Inc., N.W.
will ship out the fireworks to the neighbor island
stores during the week of June 20th and at the
latest June 24th.
. . . .
25. Because of the size and complexity of
the operations of American Promotional Events,
Inc., N.W. in Hawaii a warehouse on the island of
24
Oahu is essential. The warehouse is located at
2720 Wai Wai Loop. It is located on the island of
Oahu because of its central location for shipping
to all islands, as well as because the majority of
the company’s customer base for novelty party
items is located on the island of Oahu. Oahu is
an ideal location to maximize the safety and
efficiency of the company’s operations. It is
also ideal for cost-reduction.
26. Most importantly, the warehouse at 2720
Wai Wai Loop was modified as required by the City
and County of Honolulu Fire Department and
Building Department to meet all standards for a
warehouse in which consumer fireworks would be
stored. On Oahu, the company has the ability to
coordinate and ship product to stores at the
latest possible date and in the fastest way
possible. This minimizes the amount of time that
consumer fireworks products are sitting in
the hands of our outer island shippers.
27. American Promotional Events, Inc.,
N.W.’s shipper, Young Brothers, ships freight to
all islands via their Oahu facility. If there
were no warehouse on the Island of Oahu and only
on another island, that location would require the
company to send out product to stores earlier so
that the shippers may transfer and consolidate
consumer fireworks shipments on Oahu or other
islands. There is no practical way to avoid
shipping products between islands without going
through Oahu. There is no economical way to do
so.
. . . .
30. If the restrictions in the ordinance are
enforced, the operation of the warehouse at 2720
Wai Wai Loop cannot occur as they have in the
past. Product would have to be shipped from the
mainland facilities in Washington, Oregon or
California through the Port of Honolulu to the
other islands. The cost of this distribution
system would be substantial. This would mean that
the cost to the consumer of these products will be
much higher and there will be a more limited
variety of products available.
[Suppl. Mem. in Supp., Decl. of Chad Cloutier (“Cloutier
Decl.”).]
25
A.
Likelihood of Success on the Merits
1.
Commerce Clause
Plaintiff urges the Court to look at the “practical
effect” of the challenged ordinance to determine whether it
constitutes direct regulation of interstate commerce.
“The
practical effect of the Fireworks Ordinance is that TNT cannot
import consumer fireworks through Honolulu without exposing
itself to criminal and civil penalties.”
[Suppl. Mem. in Supp.
at 5-6.]
Plaintiff also argues that the Fireworks Ordinance
projects the City’s regulatory scheme onto the Neighbor Islands
and states in the continental United States where consumer
fireworks are legal, and that the Commerce Clause protects
against this “type of extraterritorial legislation.”
[Id. at 6.]
Plaintiff argues that there is “no way TNT can get
around the City and County of Honolulu in transporting product
into the state.”
[Id. at 7.]
It cannot relocate its warehouse
to a Neighbor Island because of “the significant additional
transportation costs . . . would be passed onto the consumers in
the State of Hawaii through increased product prices.
Also, due
to logistical or cost issues TNT would possibly stop selling
product to some smaller retailers in Hawaii.”
(citations omitted).]
26
[Id. at 7-8
2.
Article VIII of Hawai‘i Constitution
Plaintiff asserts that the City’s argument that Haw.
Rev. Stat. § 132D-17.5 gives the City the power to regulate the
import, transport, and storage of consumer fireworks is
unreasonable and inconsistent with the statute’s plain meaning.
Plaintiff argues that, because § 132D-17.5 does not explicitly
confer onto the City the power to regulate the import and storage
of fireworks, the Legislature did not intend for a county to have
such power.
Instead, the Legislature intended to allow a county
to prohibit only the use of fireworks.
3.
[Id. at 8-9.]
Vague and Overbroad
Plaintiff believes that the City concedes that
Plaintiff is likely to succeed on the merits of its third claim
for relief, and that the City did not sufficiently address the
claim because of the “inconsistent and arbitrary enforcement
statements that have been presented to TNT.”
[Id. at 11.]
Plaintiff asserts that “the changing enforcement statements” and
“internal inconsistencies in the Fireworks Ordinance are the
exact type of conduct that the due process clause is designed to
protect against.”
B.
[Id.]
Irreparable Harm
Plaintiff will suffer irreparable harm if the City is
not enjoined because the HFD “could arbitrarily enforce the
Fireworks Ordinance exposing TNT to civil and criminal
27
sanctions.”
[Id. at 11-12.]
Plaintiff also argues that it would
need to devise an alternative distribution system, resulting in
substantial costs, and would pass those costs on to the consumer.
It would also suffer from merchandise shortages and lost sales,
and the exact amount of damages would be difficult to calculate.
[Id. at 13.]
V.
The City’s Supplemental Opposition
A.
Likelihood of Success on the Merits
In its supplemental memorandum in opposition filed
June 6, 2011, the City argues that the Commerce Clause cause of
action fails because the Fireworks Ordinance does not prohibit
shipping consumer fireworks to the Neighbor Islands via Honolulu
harbor.
“ROH § 20-6.2 does not prohibit shipments of consumer
fireworks from sitting in Honolulu harbor waiting for transfer to
the Neighbor Islands, or consumer fireworks passing through,
whether or not it is actually off-loaded.”
at 4-5.]
[Suppl. Mem. in Opp.
The Fireworks Ordinance “does not preclude the
importation of consumer fireworks into anywhere in the State of
Hawaii except Honolulu.
The flow of consumer fireworks into or
out of the State of Hawaii or between the various Neighbor
Islands is not affected by the Ordinance.”
[Id. at 10-11.]
According to the City, the Commerce Clause does not
protect a particular method of operation in a retail market, and
that it “is only TNT Fireworks’ own business practice that it
28
seeks to protect.”
[Id. at 9.]
The City cites Exxon Corp. v.
Governor of Maryland, 437 U.S. 117 (1978), for the proposition
that the Commerce Clause does not protect the methods and
operations of a business from burdensome regulations; rather, the
Clause protects the interstate market.
[Id. at 9-10.]
Next, the City argues that, because the Court must
construe the Fireworks Ordinance narrowly and find any
ambiguities in favor of constitutionality, the Court must find
that the ordinance does not affect the shipping industry or
intrastate commerce.
The City claims that the Fireworks
Ordinance does not affect a matter of statewide concern, and
therefore, does not run afoul of Article VIII of the State
Constitution.
[Id. at 11.]
With respect to Plaintiff’s claim that the Fireworks
Ordinance is vague and overbroad, the City states that it “in not
vague or overbroad, it contains a ban on consumer firework[s] on
Oahu.
Nothing could be clearer.”
B.
[Id. at 12.]
Irreparable Harm and Balance of Equities
The City claims that Plaintiff will suffer no harm if
the Court denies the Motion because HFD has granted an import
license allowing Plaintiff to import consumer fireworks “to any
of the Neighbor Islands.”
[Id. at 12.]
The City also argues that the storage of consumer
fireworks on Oahu poses a danger to its citizens, and that the
29
city should “not be required to be exposed to this risk when
consumer fireworks are illegal in Honolulu.
Since TNT Fireworks
will sell all of its consumer fireworks on the Neighbor Islands
where such use is permitted, there is no detriment to storing
[them] on the Neighbor Islands.”
VI.
[Id. at 14.]
June 13, 2011 Hearing
At the hearing on June 13, 2011, the Court heard
additional testimony from: Keith Kiyotoki, a representative of
interisland shipping line Young Brothers, Ltd.; Chad Cloutier,
TNT’s Director of Sales; and HFD Battalion Chief Socrates
Bratakos.
STANDARD
In Winter v. Natural Resources Defense Council, Inc.,
129 S. Ct. 365, 374 (2008), the Supreme Court explained that “[a]
plaintiff seeking a preliminary injunction must establish that he
is likely to succeed on the merits, that he is likely to suffer
irreparable harm in the absence of preliminary relief, that the
balance of equities tips in his favor, and that an injunction is
in the public interest.”
So long as all four parts of the Winter
test are applied, “a preliminary injunction [may] issue where the
likelihood of success is such that ‘serious questions going to
the merits were raised and the balance of hardships tips sharply
in [plaintiff’s] favor.’”
Alliance for Wild Rockies v. Cottrell,
622 F.3d 1045, 1049 (9th Cir. 2010) (quoting Clear Channel
30
Outdoor, Inc. v. City of Los Angeles, 340 F.3d 810, 813 (9th Cir.
2003)).
DISCUSSION
I.
Likelihood of Success on the Merits
The Court first addresses Plaintiff’s likelihood of
success on its three claims for relief.
A.
First Claim For Relief: Commerce Clause
The Commerce Clause provides that “Congress shall have
Power . . . [t]o regulate Commerce . . . among the several
States.”
U.S. Const. art I, § 8, cl. 3.
It also carries
negative or implicit consequences for states or municipalities’
authority to regulate interstate commerce, referred to as the
“dormant Commerce Clause.”
In reviewing challenges to local regulations under the
Commerce Clause, the Ninth Circuit follows a two-tiered approach:
[1] When a state statute directly regulates or
discriminates against interstate commerce, or when
its effect is to favor in-state economic interests
over out-of-state interests, we have generally
struck down the statute without further inquiry.
[2] When, however, a statute has only indirect
effects on interstate commerce and regulates
evenhandedly, we have examined whether the State’s
interest is legitimate and whether the burden on
interstate commerce clearly exceeds the local
benefits.
S.D. Myers, Inc. v. City & County of San Francisco, 253 F.3d 461,
466 (9th Cir. 2001) (quoting Brown-Forman Distillers Corp. v.
N.Y. State Liquor Auth., 476 U.S. 573, 579 (1986)).
31
In other words, there are two broad categories of
state regulations burdening interstate commerce:
(1) those that directly burden interstate commerce
or otherwise discriminate against out-of-state
interests; and (2) those that incidentally burden
commerce. See, e.g., Kleenwell Biohazard Waste &
Gen. Ecology Consultants, Inc. v. Nelson, 48 F.3d
391, 395 (9th Cir. 1995). Regulations falling
under the first category are generally struck
down, while those in the second group are reviewed
under a balancing test. See, e.g., id. Under
this balancing test, regulations may violate the
Commerce Clause if the burdens they impose so
outweigh the putative benefits so as to render the
regulations unreasonable or irrational. See,
e.g., UFO Chuting of Haw., Inc. v. Smith, 508 F.3d
1189, 1196 (9th Cir. 2007). In turn, this Court
previously explained that “[i]t is clear, however,
that the Supreme Court used the term ‘direct’ to
refer to regulations whose central purpose is to
regulate commerce, usually in order to benefit
local interests.” Nelson, 48 F.3d at 396.
Pac. Merch. Shipping Ass’n v. Goldstene, --- F.3d ----, No.
09–17765, 2011 WL 1108201, at *20 (9th Cir. Mar. 28, 2011).
As to the first prong, whether the local statute
“directly regulates,” the Ninth Circuit explains that:
Direct regulation occurs when a state law directly
affects transactions that take place across state
lines or entirely outside of the state’s borders.
The Supreme Court has emphasized that the
“practical effect” of a challenged statute is “the
critical inquiry” in determining whether that
statute constitutes direct regulation. Healy v.
Beer Inst., 491 U.S. 324, 336, 109 S. Ct. 2491,
105 L. Ed.2d 275 (1989); see also Valley Bank [of
Nevada v. Plus System, Inc.], 914 F.2d [1186,]
1190 [(9th Cir. 1990)]. “[P]ractical effect . . .
must be evaluated not only by considering the
consequences of the statute itself, but also by
considering how the challenged statute may
interact with the legitimate regulatory regimes of
other States. . . .” Healy, 491 U.S. at 336, 109
S. Ct. 2491[.]
32
S.D. Myers, Inc., 253 F.3d at 467 (some citations and quotation
marks omitted).
First, the regulatory scheme at issue here does not
appear to fall under the “direct” category of state regulations
because the apparent purpose of the Fireworks Ordinance is to
protect the health and well-being of the City’s residents from
the harmful effects of consumer fireworks.
The Fireworks
Ordinance’s central purpose is not to regulate commerce.
See
Pac. Merch. Shipping Ass’n, 2011 WL 1108201, at *20 (“[T]he
Supreme Court used the term ‘direct’ to refer to regulations
whose central purpose is to regulate commerce, usually in order
to benefit local interests.” (citation omitted)).
The otherwise
even-handed and generally applicable Fireworks Ordinance also
does not appear to discriminate against any out-of-state
interests; that is, the City is not attempting to regulate
conduct in another state.
We are instead faced with a local Fire
Code ordinance having only an incidental or indirect effect on
commerce.
The Court, therefore, must determine whether the
burdens outweigh the putative benefits so as to render the
Fireworks Ordinance unreasonable or irrational.
Second, the Court balances the burdens and benefits of
the challenged ordinance.
Plaintiff asserts that the City’s
legitimate public safety concerns do not justify the Fireworks
Ordinance.
33
Not every exercise of state power with some impact
on interstate commerce, however, violates the
Commerce Clause. If the law “regulates
even-handedly to effectuate a legitimate local
public interest, and its effects on interstate
commerce are only incidental,” then the statute
must be upheld “unless the burden imposed on such
commerce is clearly excessive in relation to the
putative local benefits.”
Gravquick A/S v. Trimble Navigation Int’l Ltd., 323 F.3d 1219,
1224 (9th Cir. 2003) (quoting Pike v. Bruce Church, Inc., 397
U.S. 137, 142 (1970)).
Because the effects on interstate
commerce here appear to be incidental, the Fireworks Ordinance
must be upheld unless the burden is clearly excessive.
Plaintiff, the party challenging the validity of the Fireworks
Ordinance under the Commerce Clause, has the burden of
demonstrating that the burden on interstate commerce is clearly
excessive to the benefit.
See S.D. Myers, Inc., 253 F.3d at 471
(requiring the plaintiff to provide “specific details” as to how
the local ordinance affected interstate commerce).
The Court
finds that Plaintiff is not likely to meet its burden.
[F]or a court to hold that a facially neutral
statute violates the Commerce Clause, “the burdens
of the statute must so outweigh the putative
benefits as to make the statute unreasonable or
irrational.” Alaska Airlines, Inc. v. City of
Long Beach, 951 F.2d 977, 983 (9th Cir. 1991)
(holding that district court’s close balancing of
the burden on interstate commerce with the local
benefits of the challenged ordinance was
inappropriate). The court continued to hold that
a statute is unreasonable or irrational under this
test “where the asserted benefits of the statute
are in fact illusory or relate to goals that
evidence an impermissible favoritism of in-state
34
industry over out-of-state industry.”
Id.
Nat’l Ass’n of Optometrists & Opticians v. Brown, 709 F. Supp. 2d
968, 975-76 (E.D. Cal. 2010).
The Court agrees with Plaintiff that there is a burden
on the interstate and international shipment of consumer
fireworks into the State as a result of the Fireworks Ordinance.
The parties stipulated that under the State’s “hub and spoke”
shipping model, goods imported into the State first arrive in
Honolulu before continuing on to the Neighbor Islands.
The
Fireworks Ordinance prohibits the importation of consumer
fireworks into Honolulu.
Thus, the Fireworks Ordinance, in
conjunction with the “hub and spoke” shipping model, works to
prevent the importation of consumer fireworks (other than
firecrackers).
The City’s interest in the safety of its
citizens, however, reasonably outweighs any incidental impact on
interstate commerce.
See, e.g., Cascade Fireworks, Inc. v.
State, 738 P.2d 1013, 1015 (Or. App. 1987) (upholding state
regulation on the sale of fireworks and finding “the state’s
interest in the safety of its citizens clearly outweighs any
incidental impact on interstate commerce”).
The Court finds that
the Fireworks Ordinance’s putative health and safety benefits are
not so outweighed by any burden on interstate commerce as to
render the ordinance unreasonable or irrational.
The Court also concurs with the City that it is
35
Plaintiff’s business judgment and shipping industry strictures,
and not the Fireworks Ordinance, which affect interstate
commerce.
The prohibition on storing fireworks is limited to
Oahu where Plaintiff has chosen to locate its warehouse, not to
the Neighbor Islands.
Further, the shipping industry’s practices
affect all businesses and goods that travel interstate and
intrastate equally, and according to the City “this is a cost of
doing business in Hawaii and not a result of [the Fireworks
Ordinance].”
[Suppl. Mem. in Opp. at 7-8.]
The Court is mindful of the effect the Fireworks
Ordinance and this Court’s ruling may have on Plaintiff’s
operations within the State, including the possibility that
Plaintiff will consider withdrawing from this market.
The
Commerce Clause, however, does not protect Plaintiff’s method of
operation in a retail market.
The Supreme Court in Exxon Corp.
v. Governor of Maryland, 437 U.S. 117, 127 (1978), rejected the
argument that the state interfered “with the natural functioning
of the interstate market either through prohibition or through
burdensome regulation.”
The Exxon decision explains:
We cannot, however, accept appellants’ underlying
notion that the Commerce Clause protects the
particular structure or methods of operation in a
retail market. . . . [T]he Clause protects the
interstate market, not particular interstate
firms, from prohibitive or burdensome regulations.
It may be true that the consuming public will be
injured by the loss of the high-volume, low-priced
stations operated by the independent refiners, but
again that argument relates to the wisdom of the
36
statute, not to its burden on commerce.
Id. at 127-28 (citations omitted); see also Nat’l Ass’n of
Optometrists & Opticians, 709 F. Supp. 2d at 978 (“[P]laintiffs
have not shown that these regulations are a burden to interstate
commerce, but rather that they inhibit the business model
plaintiffs find to be most profitable.”); Wal-Mart Stores, Inc.
v. City of Turlock, 483 F. Supp. 2d 987, 1012 (E.D. Cal. 2006)
(“The Commerce Clause does not protect the particular structure
or methods of operation of a retail market.
Nor does it give an
interstate business the right to conduct its business in what it
considers the most efficient manner, for the Constitution
protects the interstate market, not particular interstate firms.”
(citation and quotation marks omitted)).
For these reasons, the Court FINDS that based on the
current record before the Court, Plaintiff is not likely to
succeed on the merits of its first claim for relief.
B.
Second Claim for Relief: Article VIII of Hawai‘i
Constitution
Article VIII, section 1 of the Hawai‘i Constitution
states: “The legislature shall create counties, and may create
other political subdivisions within the State, and provide for
the government thereof.
Each political subdivision shall have
and exercise such powers as shall be conferred under general
laws.”
Plaintiff claims that the Fireworks Ordinance exceeds the
authority granted to the City.
37
The Hawai‘i Supreme Court has explained the
relationship between the State and counties as follows:
“Municipal corporations are solely the creation of
the State. As such[,] they may exercise only
those powers which have been delegated to them by
the State legislature.” In Re Application of
Anamizu, 52 Haw. 550, 553, 481 P.2d 116, 118
(1971) (citations omitted). See also Haw. Const.
art. VIII, § 1 (1978) (“Each political subdivision
shall have and exercise such powers as shall be
conferred under general laws.”). Accordingly, if
no provision of the Hawai‘i Constitution or the
HRS empowers the city to enact and enforce the
ordinance, the ordinance is invalid.
State v. Medeiros, 89 Hawai’i 361, 365, 973 P.2d 736, 740 (1999).
The City asserts that the State delegated to the
counties the full authority to ban fireworks in Haw. Rev. Stat.
§ 132D-17.5, which provides:
(a) Nothing in this chapter shall be construed to
supersede or in any manner affect a county
fireworks ordinance; provided that the ordinance
is at least as stringent in the control or
prohibition of fireworks as the law under this
chapter.
(b) Nothing in this chapter shall prohibit a
county from enacting ordinances that are more
stringent in the control or prohibition of
fireworks than this chapter.
Plaintiff, however, argues that, because § 132D-17.5 does not
explicitly confer onto the City the power to regulate the import
and storage of fireworks, the Legislature did not intend for a
county to have such power; instead, the Legislature intended to
allow a county to prohibit only the use of fireworks.
The Court
disagrees and finds that the Fireworks Ordinance is an ordinance
38
that is “more stringent in the control or prohibition of
fireworks” enacted within the City’s power granted by Haw. Rev.
Stat. § 132D.
Nor is the Fireworks Ordinance an invalid law of
general application or statewide concern.
Plaintiff claims that
the Fireworks Ordinance, which prohibits the import and storage
of consumer fireworks on Oahu, is void on its face because it
effectively regulates commerce between the islands, a matter of
statewide concern.
A law of general application throughout the
state is a law of statewide concern within the meaning of article
VIII, section 6 of the Hawai‘i Constitution.
Richardson v. City
& County of Honolulu, 76 Hawai‘i 46, 66, 868 P.2d 1193, 1213
(1994).
The Fireworks Ordinance regulates only the possession,
import, storage, and licensing of fireworks within the City and
County of Honolulu, and does not apply equally to the Neighbor
Islands.
For these reasons, the Court FINDS that based on the
current record before the Court, Plaintiff is not likely to
succeed on the merits of its second claim for relief.
C.
Third Claim for Relief: Vague and Overbroad
Prohibitions
Plaintiff brings this cause of action pursuant to
Article I, section 5 of the Hawai‘i Constitution, which states:
“No person shall be deprived of life, liberty or property without
due process of law, nor be denied the equal protection of the
39
laws, nor be denied the enjoyment of the person’s civil rights or
be discriminated against in the exercise thereof because of race,
religion, sex or ancestry.”
According to the Hawai‘i Supreme Court:
When confronted with a constitutional
challenge of a penal statute on the grounds of
vagueness or overbreadth, we apply a number of
principles on appeal.
First,
[t]he constitutionality of a
statute is a question of law which is
reviewable under the right/wrong
standard. Additionally, where it is
alleged that the legislature has acted
unconstitutionally, this court has
consistently held that every enactment
of the legislature is presumptively
constitutional, and a party challenging
the statute has the burden of showing
unconstitutionality beyond a reasonable
doubt. The infraction should be plain,
clear, manifest and unmistakable.
....
Second, we construe penal statutes
narrowly, considering them in light of
precedent, legislative history, and common
sense. . . .
Third, where possible, we will read a
penal statute in such a manner as to preserve
its constitutionality.
To accord a constitutional
interpretation of a provision of broad or
apparent unrestricted scope, courts will
strive to focus the scope of the provision to
a narrow and more restricted construction.
Provisions of a penal statute will be
accorded a limited and reasonable
interpretation under this doctrine in order
to preserve its overall purpose and to avoid
40
absurd results.
Put differently, a statute will not be held
unconstitutional by reason of uncertainty if
any sensible construction embracing the
legislative purpose may be given it. Mere
difficulty in ascertaining its meaning, or
the fact that it is susceptible to
interpretation will not render it
nugatory. . . .
State v. Bates, 84 Hawai‘i 211, 220, 933 P.2d 48, 57 (1997)
(quoting State v. Gaylord, 78 Hawai‘i 127, 137-38, 890 P.2d 1167,
1177-78 (1995)) (alterations in Bates) (some citations omitted).
With these principals in mind, the Court first examines
whether the Fireworks Ordinance is void for vagueness.
It is a
basic principle of due process that an enactment is void for
vagueness if its prohibitions are not clearly defined.
The
Fireworks Ordinance states, in pertinent part:
(a) It shall be unlawful for any person to
possess, use, explode or cause to explode any
consumer fireworks within the city.
. . . .
(c) It shall be unlawful for any person to import,
store, sell, keep or offer for sale, expose for
sale any fireworks within the city.
ROH § 20-6.2.
The Court finds that the prohibitions set forth in the
Fireworks Ordinance are clearly defined and give a person of
ordinary intelligence a reasonable opportunity to know what is
prohibited, so that he or she may act accordingly.
See United
States v. Jae Gab Kim, 449 F.3d 933, 941-42 (9th Cir. 2006).
The
Court, however, is mindful that the City’s statements regarding
41
enforcement at the June 13, 2011 hearing and in its filings may
have the tendency to create ambiguity.
For example, the City
explained that it would not prohibit the shipment of consumer
fireworks to the Neighbor Islands via Honolulu harbor.
The
parties do not dispute that Honolulu harbor is within the City
and County of Honolulu for purposes of the Fireworks Ordinance.
According to the City, HFD has recognized import licenses issued
by Neighbor Islands, “and has not precluded the transportation of
those fireworks through Honolulu Harbor, nor has HFD required a
separate import license be obtained from Honolulu County.”
in Opp. at 15-16.]
[Mem.
This assertion was supported by the testimony
of Keith Kiyotoki, a sales and marketing manager for Young
Brothers, who testified at the hearing that importers of consumer
fireworks into the State of Hawai‘i, other than Plaintiff, use
freight forwarders who act like consolidators.
The freight
forwarders pick up containers that have been shipped to Honolulu
harbor, take them to their warehouses to load fireworks along
with other cargo destined for a Neighbor Island, and then return
the containers to Young Brothers for shipment to the Neighbor
Island.
The City’s witness, HFD Battalion Chief Bratakos,
confirmed that the fire department considers a container with
consumer fireworks that is taken by an importer or a licensed
bonded freight forwarder to a licensed bonded warehouse where the
contents are unpacked and are intended for immediate repackaging
and shipping to the Neighbor Islands as being part of the
42
shipping process.
If these consumer fireworks are held for a
matter of days and up to a week, it would be considered temporary
storage, and not as storage of consumer fireworks in violation of
the Fireworks Ordinance.
Plaintiff, however, takes issue with Defendant’s
interpretation of the Fireworks Ordinance and argues that it
conflicts with the ordinance’s plain language.
Plaintiff fears
that the Honolulu Fire Department may change this interpretation
without notice and, as a result, Plaintiff is at risk of being
cited or even criminally prosecuted.
Plaintiff, in essence, is
not challenging the ordinance itself as being vague but, instead,
is challenging the manner in which Defendant has chosen to
enforce it.
An analogy, while imperfect, may be the state law
against exceeding the posted speed limit.
If a vehicle is driven
as little as one mile over the limit, the driver is in violation
of the law.
There is nothing vague about it and the prohibitions
are clearly defined.
A police officer or even a police
department may, however, decide that citations for speeding will
be issued only for drivers who are more than five miles above the
speed limit.
This choice of enforcement does not render the law
unconstitutionally vague.
While the Court shares some of Plaintiff’s concerns
with respect to the City’s statements regarding the incidental
importation of consumer fireworks destined for the Neighbor
Islands, in light of the pre-enforcement nature of Plaintiff’s
challenge, the Court finds that the Fireworks Ordinance itself is
43
not unconstitutionally vague.
See Stoianoff v. State of Mont.,
695 F.2d 1214, 1222 (9th Cir. 1983) (“The possibility that the
Act will be enforced arbitrarily, is of no due process
significance unless the possibility ripens into a prosecution.”
(citation omitted)).
Further, the Fireworks Ordinance does not
vest the City with “virtually complete discretion” to determine
whether the ordinance has been violated, and therefore, the
ordinance is not unconstitutionally vague.
See Kolender v.
Lawson, 461 U.S. 352, 359 (1983); see also Village of Hoffman
Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 503
(1982) (“The language of the ordinance is sufficiently clear that
the speculative danger of arbitrary enforcement does not render
the ordinance void for vagueness.”).
The Court next turns to Plaintiff’s overbreadth
challenge.
“The doctrine of overbreadth, although closely
related to a vagueness claim, is distinct in that while a statute
may be clear and precise in its terms, it may sweep so broadly
that constitutionally protected conduct is included in its
proscriptions.”
Tause v. State, Dep’t of Labor & Indus.
Relations, 113 Hawai‘i 1, 28 n.27, 147 P.3d 785, 811 n.27 (2006)
(quoting State v. Bui, 104 Hawai‘i 462, 465, 92 P.3d 471, 474
(2004)).
Plaintiff does not sufficiently identify any
constitutionally protected conduct included within the Fireworks
Ordinance’s proscriptions.
It argues only that the ordinance is
44
overbroad because it would punish the “innocent” and
“constitutionally protected behavior” of importing and supplying
fireworks to the Neighbor Islands.
The Court disagrees and finds
that the Fireworks Ordinance does not punish the importing and
supplying of consumer fireworks to the Neighbor Islands.
The primary compliance hurdle for Plaintiff appears to
be its need to store and repackage consumer fireworks in between
the Neighbor Islands’ legal fireworks selling seasons.
Plaintiff
has chosen to centrally locate its warehouse in Honolulu, which,
when combined with the unique nature of the consumer fireworks’
market (that is, that the retail season is essentially two weeks
during the Fourth of July and two weeks during New Year’s Eve)
and the State’s shipping practices, works to Plaintiff’s
disadvantage under the new Fireworks Ordinance.
This combination
of factors does not render the law unconstitutionally vague or
overbroad.
Further, legislative enactments are presumptively
constitutional, “and the party challenging a statute has the
burden of showing the alleged unconstitutionality beyond a
reasonable doubt.”
Bui, 104 Hawai‘i at 466, 92 P.3d at 475
(citation and quotation marks omitted).
As explained above, at
this point, Plaintiff has not demonstrated that the Fireworks
Ordinance is unconstitutionally vague or overbroad.
For these reasons, the Court FINDS that on the current
record before the Court, Plaintiff is not likely to succeed on
45
the merits of its third claim for relief.
II.
Irreparable Harm
The Court next turns to the analysis of whether
Plaintiff will suffer irreparable harm in the absence of an
injunction.
The primary injuries alleged by Plaintiff relate to
monetary harm (e.g., that it would “have to abandon its $750,000
investment in the Warehouse distribution facility [and] devise an
alternative distribution system that somehow complies with the
Fireworks Ordinance at substantial costs” [Suppl. Mem. in Supp.
at 13]).
Typically, monetary harm does not constitute
irreparable harm.
L.A. Mem’l Coliseum Comm’n v. Nat’l Football
League, 634 F.2d 1197, 1202 (9th Cir. 1980).
This is so because
“economic damages are not traditionally considered irreparable
because the injury can later be remedied by a damage award.”
Cal. Pharmacists Ass’n v. Maxwell-Jolly, 563 F.3d 847, 852 (9th
Cir. 2009).
Plaintiff, however, also alleges constitutional
violations.
“Unlike monetary injuries, constitutional violations
cannot be adequately remedied through damages and therefore
generally constitute irreparable harm.”
Nelson v. NASA, 530 F.3d
865, 882 (9th Cir. 2008), reversed on other grounds, 131 S. Ct.
746 (2011).
The Court, however, has determined that Plaintiff is
not likely to succeed on its claims of constitutional violations,
and without more, the Court will not presume irreparable harm in
46
this instance.
Plaintiff further alleges it will suffer loss of
business reputation and goodwill amongst the general public and
its customers.
At the June 13, 2011 hearing, TNT’s Director of
Sales, Chad Cloutier, testified that TNT’s business reputation
would be effected if it were unable to get consumer fireworks to
its Neighbor Island Customers in time for the upcoming Fourth of
July season.
He also said it could possibly endanger TNT’s
national contracts.
Injuries to goodwill and business reputation
are generally considered to be intangible and, as a result,
irreparable.
See, e.g., Rent-A-Center, Inc. v. Canyon Television
& Appliance Rental, Inc., 944 F.2d 597, 603 (9th Cir. 1991)
(“[W]e have also recognized that intangible injuries, such as
damage to ongoing recruitment efforts and goodwill, qualify as
irreparable harm.”); MySpace, Inc. v. Wallace, 498 F. Supp. 2d
1293, 1305 (C.D. Cal. 2007) (“Harm to business goodwill and
reputation is unquantifiable and considered irreparable.”).
Plaintiff has not, however, produced any evidence of
actual loss of goodwill or business reputation, but speculated
that it will suffer loss if it is found to be in violation of the
Fireworks Ordinance or unable to timely deliver shipments to
Neighbor Island retailers.
“Although the loss of goodwill and
reputation are important considerations in determining the
existence of irreparable injury, there must be credible and
47
admissible evidence that such damage threatens Plaintiff’s
businesses with termination.”
Dotster, Inc. v. Internet Corp.
For Assigned Names & Nos., 296 F. Supp. 2d 1159, 1163-64 (C.D.
Cal. 2003).
The conclusory statements provided at the June 13, 2011
hearing alone cannot support a finding of irreparable injury for
the issuance of a preliminary injunction at this stage.
See,
e.g., Am. Passage Media Corp. v. Cass Commc’ns, Inc., 750 F.2d
1470, 1473 (9th Cir. 1985) (declarations of plaintiff’s
executives detailing the disruptive effect of defendant’s
exclusive contracts on plaintiff’s business could not support the
issuance of a preliminary injunction because they were
“conclusory and without sufficient support in facts”); Goldie’s
Bookstore, Inc. v. Sup. Ct., 739 F.2d 466, 472 (9th Cir. 1984)
(reversing issuance of preliminary injunction where district
court had determined that plaintiff “would lose goodwill and
‘untold’ customers” because the finding was not based on any
factual allegations and was speculative).
In light of the
speculative and tenuous evidence of possible loss of goodwill or
business reputation,2 the Court cannot find that Plaintiff will
2
“[T]he court’s findings of fact and conclusions of law
with regard to the preliminary injunction are not binding at
trial. Based, as they usually are, on incomplete evidence and a
relatively hurried consideration of the issues, these provisional
decisions should not be used outside the context in which they
originally were rendered.” 11A Charles Alan Wright, Arthur R.
(continued...)
48
suffer irreparable harm if an injunction is not granted.
III. Balance of Equities
“To determine which way the balance of the hardships
tips, a court must identify the possible harm caused by the
preliminary injunction against the possibility of the harm caused
by not issuing it.”
Univ. of Haw. Prof’l Assembly v. Cayetano,
183 F.3d 1096, 1108 (9th Cir. 1999).
It appears that the primary
hardship that denying the injunction would cause Plaintiff is the
loss of profits stemming from its business.
Although Plaintiff
argues that the balance of equities tips in its favor because of
the importance of protecting its constitutional right to engage
in interstate commerce, the Court does not find that Plaintiff is
likely to succeed on the merits of this claim.
The Court greatly
sympathizes with Plaintiff, and acknowledges that the Fireworks
Ordinance deals a heavy blow to Plaintiff.
Financial hardship
will be great because of the investment in its Honolulu warehouse
and inventory, the cost of relocating to a Neighbor Island, and
the additional shipping expense caused by the “hub and spoke”
system used by the local shippers.
On the other hand, according to the City, granting the
injunction would require HFD to monitor consumer fireworks stored
on Oahu, shipped out to the Neighbor Islands, and returned after
2
(...continued)
Miller, Mary Kay Kane, Richard L. Marcus, Federal Practice &
Procedure § 2950 (2d ed.).
49
the selling season.
The City argues that its citizens should not
be exposed to this risk when consumer fireworks are illegal on
Honolulu, and that, because consumer fireworks are legal on the
Neighbor Islands, there is no detriment to Plaintiff storing them
there.
After careful thought and review of the record, the Court
FINDS that Plaintiff has not established that the balance of
hardships tips in its favor.
VI.
Public Interest
With respect to the public interest inquiry:
The plaintiffs bear the initial burden of
showing that the injunction is in the public
interest. See Winter, 129 S. Ct. at 378.
However, the district court need not consider
public consequences that are “highly speculative.”
In other words, the court should weigh the public
interest in light of the likely consequences of
the injunction. Such consequences must not be too
remote, insubstantial, or speculative and must be
supported by evidence.
Finally, the district court should give due
weight to the serious consideration of the public
interest in this case that has already been
undertaken by the responsible state
officials . . . who unanimously passed the rules
that are the subject of this appeal. See Golden
Gate Rest. Ass’n, 512 F.3d at 1127 (“The public
interest may be declared in the form of a
statute.” (internal quotation marks omitted)); see
also Burford v. Sun Oil Co., 319 U.S. 315, 318, 63
S. Ct. 1098, 87 L. Ed. 1424 (1943) (“[I]t is in
the public interest that federal courts of equity
should exercise their discretionary power with
proper regard for the rightful independence of
state governments in carrying out their domestic
policy.” (internal quotation marks omitted)).
Stormans, Inc. v. Selecky, 586 F.3d 1109, 1139-40 (9th Cir. 2009)
50
(some citations and quotation marks omitted).
The public
interest inquiry primarily addresses the impact on non-parties
rather than parties.
Plaintiff argues that Neighbor Island retailers are
expecting fireworks for the Fourth of July to be delivered on
time, and that customers statewide expect to be able to use
firecrackers during the lawful fireworks season and for cultural
purposes.
The City contends that public safety and the City
Council’s legislative determination to ban consumer fireworks
weigh more heavily in favor of the public interest.
The City
avers that the majority of fireworks imported into the State are
consumer fireworks, and that the majority of fireworks injuries
statewide occur in the City and County of Honolulu.
at ¶ 21, 23.]
[Perry Aff.
In light of all the facts and circumstances
discussed above, the Court FINDS that Plaintiff has not
established that the public interest requires entry of a
permanent injunction at this point.
V.
Summary of Analysis of Injunction Factors
In sum, the Court concludes that Plaintiff has not
demonstrated a high likelihood of success on the merits or
irreparable harm, and that the balance of equities and
consideration of the public interest do not require an injunction
at this time.
CONCLUSION
51
On the basis of the foregoing, American Promotional
Events, Inc. – Northwest, doing business as TNT Fireworks’,
Motion for Preliminary Injunction, filed on April 11, 2011, is
HEREBY DENIED.
IT IS SO ORDERED.
DATED AT HONOLULU, HAWAII, June 17, 2011.
/S/ Leslie E. Kobayashi
Leslie E. Kobayashi
United States District Judge
AMERICAN PROMOTIONAL EVENTS, INC. - NORTHWEST DBA TNT FIREWORKS
V. CITY & COUNTY OF HONOLULU; CIVIL NO. 11-00242 LEK-RLP; ORDER
DENYING PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION
52

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